Sale Settlement Structured

hey, this is joe. i’ve got another questionhere. this one is from jimmy thomas. jimmy says, “what if i close a subject to dealand i found a buyer before i close, but the buyer ends up changing their mind at closing?now i’m stuck with the house and stuck with the loans.”first of all, you don’t want to, and if you look at some of my old videos, you’llhear me say that if you buy subject to you

Sale Settlement Structured, can sell it subject to because you have thedeed. well, because of the safe act, because of dodd frank, there’s some new rules aboutthat. you probably do not want to take a subject to property, a deed, and then deed that propertyto someone else. now, you might want to assign your right tobuy to somebody else, so let’s say i go

to you, you’re the seller. and i want tobuy it and i’m going to assign it to someone else. i could buy that property with a purchaseagreement. instead of having you deed it to me i’ll take purchase agreement that allowsme to buy it on a subject to which means that you’re going to deed me the property. thatpurchase agreement is assignable. i could then take that purchase agreement and assignit to someone for a fee. they pay me a fee for it and i then assign them the right tobuy and then they go in and buy that property directly from that seller.now. with that said, that is possible. with that said, i don’t do that either. and thereason i don’t is because i believe that you have to assume that you’re the mostethical person in the room. that you will

always do the right thing and i’m countingon you by giving you this information that you do treat people right and you do the rightthing with people and that you follow through and do what you promise.so, with that in mind, that means that we, as in the investor, have to have the mostcontrol in the deal. if we have more control, then we don’t have to worry about somebodyelse doing the right thing because we have control of the deal. so, if we’re not goingto stay in the deal, if we’re just going to assign our right to buy to someone else,of if we’re just going to flip the property, then we want the person who’s at most riskto be in the most control. so in a subject to deal, if you assign a subjectto to somebody that you don’t know as well

and you think that that person might be riskierthan the seller, because the seller has the loan at risk. his credit’s a risk if youdon’t pay on a subject to. so if you just assign it to this person and this person dropsit, it’s not going to hurt his credit. but it is going to destroy the seller’s credit.the buyer doesn’t have much, they don’t have much recourse against the buyer at all.so what you want to do is protect your seller. so instead what you can do is you can setit up as a land contract. and you can write up a purchase agreement with a land contractand make that purchase agreement assignable then you can assign it to the new investor.that way when it’s transferred to the new investor, if that new investor stops makinghis payments at any particular time, this

seller isn’t screwed. he still has controlover the deal and he can take the property back through a judicial action and then sellit to someone else later, or you can sell it for them. and so it’s much safer thatway. so, but your question is what do you do ifsomebody changes their mind? so you’ve got this property, now, instead of just havingthem deed it, you’re going to have the purchase agreement and you’re going to have ninetydays on that purchase agreement. so the first guy says, “yes, i’m going to do it,”and doesn’t do it, you just go find somebody else. and you’ll find, and with this typeof deal, with these types of terms deals, you can sell them very quickly as long asyour monthly payment is at or below market

rent. because they can’t get something that’scheaper than that, especially if they don’t have the credit to build a qualify for a mortgagewhich 75% of the country does not have. so you’ve got a lot potential buyers outthere who can’t go out and buy a property any other way except on terms. so tellingit on terms is not difficult. finding buyers is not difficult. structuring it properlyso that everybody’s protected, that’s what you have to think about, that’s whatyou have to think in advance. and you don’t have to worry about people backing out thisway. you know, one of the things that we see withpeople that do a lot of wholesale deals, they’ll think they’ve got this fantastic, yeah,“i got it thirty percent under market value.

it looks great, you know, it’s in good condition,i know i can transfer this property, and you can go out and make yourself $50,000.” andthen they go out there and they try to find a buyer and they give it to their buyers list,and their buyer’s list asks them a hundred questions about it and then don’t buy.or they’ve got one guy says, “oh, i’m, i’ll buy it. if you just get it thirty percentunder market value,” and it’s like this, and like this, and like this, and like this,exactly the way you set it up. then you send it to them, they say, “nah, i don’t reallywant that one.” and then you’re screwed. you’ve got nothing else. so you’ve gotto go find another buyer for it. and then your time runs out and if you put a depositdown you’ll lose that deposit. so you’ve

got to be careful how you structure thesedeals so that you know what your exit strategy is and so that you have more than potentialbuyer for a property. that’s why when you structure a deal ona seller financed type of basis, it’s much easier to find a buyer for those deals becausethere’s a lot fewer of them available and a lot more people that the only way they canbuy is through seller financing. all right. hope that helps. thanks now.

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